Late last month, a pitch night was held in Chicago for entrepreneurs in technology! The event highlighted entrepreneurs of color.
This article highlights three obstacles that have relevance to entrepreneurs today. The lack of financing is one that is featured.
Overcoming 3 Challenges African-American Female Entrepreneurs Face
African-American women start businesses at a rate six times the national average for all businesses, and now own 1.3 million businesses, employing nearly 300,000 workers and creating $52.6 billion in revenue every year.
But despite these advances, African-American women continue to face obstacles to progress, ranging from lack of financing to lack of confidence. Here’s a look at some of the hurdles female African-American entrepreneurs often face, along with some tips on how to overcome them.
Lack of cash is one of the biggest causes of small business failure, making financing a major priority for any successful company. Financing is especially tight for female-owned companies, with fewer than 3 percent receiving venture capital funding. Unless your firm can demonstrate billion-dollar potential to investors, you stand the best chance of attracting venture capital if you apply to a firm run by female-owned or African-American partners. For instance, Joanne Wilson’s Gotham Gal Ventures deliberately seeks out startups run by African-American women. There are also grants specifically geared toward women and African-Americans, such as the SBA Office of Women’s Business Ownership InnovateHER Innovating for Women Business Challenge, or grants from the Department of Commerce’s Minority Business Development Agency.
The SBA also offers small business loans, which are another means of financing. You have the best odds of getting an SBA loan if your company has been in business for at least two years and has a track record of a steady cash flow to cover loan repayments, says SmartBiz CEO Evan Singer. Bank lenders similarly seek a good credit history when considering loan applications.
If these financing routes don’t succeed for you, don’t give up! Most people actually start their businesses with their own savings or credit cards or loans from family and friends. You can also try business crowdfunding sites such as Fundable.
You’ll find it easier to apply for a loan or grant if you have an experienced mentor to guide you. Finding a mentor is another area where African-American women tend to face challenges. Fortunately, there are some excellent resources to assist you with this problem. One of the best is SCORE, an SBA partner with thousands of volunteer mentors all over the country. SCORE mentors can help you develop your business plan, suggest financing resources and get you in touch with networks of contacts to assist you. SCORE also provides workshops and online resources to help guide your company’s development.
Babson’s research shows that fear of failure is the biggest concern of women who start up businesses. Fear of failure can cloud your decision-making and, worst of all, paralyze you into not getting started.
Fortunately, there are some proven ways to overcome fear of failure and build confidence. One is forcing yourself to face your fear by doing the thing you’re afraid of, which will often result in convincing you that it wasn’t as scary as you thought. For instance, you might put off filling out the paperwork to start your business or file your taxes because the thought intimidates you, but once you actually do it, it’s not so intimidating. A variation on this strategy is to start a part-time business that requires you to practice sales, such as direct selling for Amway. Gaining sales experience is an excellent way to gain confidence in your ability to run a business, since managing your sales efforts involves many of the same skills you need to manage a business on a smaller scale.
Another method is externalizing your fear as something you can push away from you. For instance, write your fear down on a piece of paper and then simply throw it away.
A third method is ignoring it. Getting your mind off your fear by distracting yourself with the task at hand can change your emotional state and make your fear manageable.
This entrepreneur presents his view showing that he has an internal locus of control all the while taking a punch at reality. His view on entrepreneurship, if applied, will encourage and develop new entrepreneurs, or at the very least, entrepreneurial thinking.
Black Is the New Black: An African-American Entrepreneur’s Manifesto
Today’s business environment is faster-paced, more aggressive and more open than at any point in our history. Yes, you read correctly — I said more open.
Sure, issues remain that affect those of us who have a darker pigmentation in our skin, are female or are part of the LGBT community. However, none of us have to think back too far to realize how far we have come. I am not naive. I have spent the last 20 years in the technology space, and I have never done a significant deal with or worked for someone who looks like me. So before we go any further, I get it. Things aren’t fair, diverse or very inclusive in the tech space. The question is, “What are we going to do about it?”
While this article centers around the African-American perspective, since that is my experience, I believe the same considerations can be applied to any group looking to break barriers in business.
It starts with the kids.
There are plenty of headlines about diversity and inclusion and plenty of articles communicating the historical data about lack of diversity in the past at Big Company X, Y and Z. Current data shows that there are still not many African-Americans in the technology field. I commend the positive response from firms like Google, IBM, Intel and others for their initiatives to improve the number of hires from underserved communities. However, we must start earlier by encouraging African-American kids to focus on becoming job creators versus job seekers. We have to create an ownership mindset, the mental model that allows our kids to see entrepreneurship and risk-taking as the foundations of greatness in business, and reframe the expectation that a four-year degree and a good job is enough.
For those of us on the front line of change in the business world, we need to educate young people about the commitments and courage required to swim upstream in spite of the obstacles. Personally, I was not able to win by clocking out at 5 p.m. every day. My attitude and commitment towards hard work gave me the mental toughness to push through issues that would block the progress of others. I didn’t allow myself to believe that work/life balance applied to me until I had accumulated momentum in my career. My parents always preached that I had to be twice as good to get half as far, period. By embracing that truth, I never expected fairness, only opportunity. I didn’t feel excluded from the “club” when I wasn’t invited to lunch. I didn’t even take lunch because I was using those five hours a week — 260 hours a year — to pass those guys. I created a personal brand where my performance spoke louder than my ethnicity or academic pedigree.
According to Maya Beasley, a diversity expert, “Any student of color looking at the numbers from the tech giants is going to be turned off… They don’t want to be the token.” My hope is that our young, talented African-American professionals who are skilled enough to be hired, resolve not to care about the negative — except as fuel to be an inspiration. Someone has to lead the charge, take the hits and change the narrative from the inside.
Years ago, I was invited to Pinehurst #2, one of the premier golf courses in the U.S., for a business meeting and golf outing. I still recall the feeling as I walked inside and saw people that looked like me serving food, carrying bags or parking cars. None were playing golf. An African-American locker room attendant turned to me and asked, “What do you do?” I explained my role as CEO of a North Carolina technology company, and that I was there trying to win a large business deal. He asked what advice I could pass on to his studious grandson to succeed in the business world. In that moment, was I a token or an inspiration?
Priorities can drive change.
We have youth leagues in abundance for African-American kids to put a ball through a hoop, but we need to be just as committed to mentoring students who want to start a business. Many of us have the means to put our money into tech startups led by women, people of color or those in the LGBT community as opposed to purchasing the bigger house and newer car, but we don’t make that a moral imperative. I encourage those of us who have the desire to make a change to also count the steps we are taking to make a difference.
In my role as a member of boards of directors of private firms, I encourage organizations to look at their diversity numbers. As CEO of Creative Allies, I ensure that our team reflects our commitment to diversity. As an investor, I provide a meaningful percentage of my investments and mentorship to minority-owned startups. The action for all of us is to invest time, money and expertise to build a more inclusive future.
As an emerging leader or employee, your job is to be a top performer in whatever you do currently. Our society will always promote, encourage and create opportunities for winners. The world will not be fair because we wish it to be. However, by taking personal responsibility for our success in spite of obstacles, and instilling these entrepreneurial values in our youth, we will smooth the path for those who come after us, and enable more of them to climb to the top of big companies (or build their own).
This change will come when African-American executives and business owners reach back into their communities, universities and entry-level floors to create a new paradigm for our industry. We cannot eliminate injustice from the world, but we can condition ourselves to win with the tools we have today.
This was inspiring to read! These entrepreneurs have responded to problems and needs in their communities. Reading where they believe they will be in 20 years is more inspiring. A few of them mention social change as a goal.
This article gave a brief overview of the role that gender can play when starting a business. Unfortunately, if the data provided here is accurate, it looks as though the gender gap, particularly regarding entrepreneurship, continues to grow. While this article gave a few example as to why this might be happening which included capital raising, work-life balance and education, I’m not sure this tells the whole story. This article left me wondering about what other contributing factors might play into this issue? Why aren’t more women starting up businesses? Is it really just because of family obligations, or, is there something much deeper causing this discrepancy?
Early in the class, we talked about some of the perceived problems with the traditional billable hour, and discussed some alternative pricing structures that attorneys have been using. (See, e.g., this article, summarizing the issues). Of course, some attorneys have turned to flat fee pricing, where they quote and bill a client one fee, without an hourly rate. Other attorneys have turned to capped fee pricing, where they still bill an hourly rate, but will not charge the client a total sum above a certain number.
The author of this article asserts that capped fee pricing is almost never a good deal for the attorney or the client. This is because the attorney has no special incentive before reaching the cap, and loses all incentive after the cap. The author asserts that flat fee pricing is always better, as the attorney has an incentive to be quite efficient. I found this to be an interesting read, and gives us an insight into some of the incentives analysis behind various pricing structures.
The Supreme Court took a different approach than it did in the 1980s with regards to injunctions and patent law jurisprudence more broadly. Indeed, in previous cases the Supreme Court “held that once a defendant has been determined to infringe a valid patent, there was a “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.” In Ebay, however, the Court reversed this long-standing precedent and held that permanent injunctions were now a equitable remedy that can only be issued if a plaintiff/patent holder could establish a four-factor test. The test “require[d] a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.” The promulgation of this test engendered a new epoch regarding patent law jurisprudence.
With regards to Ebay’s legal precedents, injunctions were first contemplated in a 1908 Supreme Court case called Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405 (1908), where the Court “recognized that patents are property and as a general rule a patent owner was entitled to permanent injunctive relief as a remedy for infringement.”
The upshot of Ebay’s ruling is that it, at least conceivably, would make it much more difficult for patent holders to get injunctions. The Court’s reasoning in Ebay was grounded in the notion that the “creation of a right is distinct from the provision of remedies for violations of that right.” And that the relevant section of the Patent Act asserts that it is “[s]ubject to the provisions of this title” other sections of the Act that state injunctive relief may only issue “in accordance with the principles of equity.” As such, it was a legal fiction that the general rule favored permanent injunctions.
One of the lasting effects of the Ebay’s ruling is that trials courts now have considerable discretion regarding an analysis into the four factor test and the weighing of each prong. Indeed, the Ebay test has made the injunction analysis a decidedly fact-intensive inquiry. Justice Thomas, who penned the majority’s opinion, did not provide lower courts with any guidance regarding the application of the four-factor test. In fact, the only guidance that the Court offers comes from Justice Kennedy’s concurrence where he suggests that courts should consider “the nature of the patent being enforced and the economic function of the patent holder.” As such, it appears that the test should be viewed from an economic perspective.
In future patent law cases where the test will be applied, it appears that considerable litigation will occur over the direct competition prong. An analysis focused on direct competition would, at first blush, appear to be an optimal guide-post in any Ebay analysis.
President Trump’s son-in-law, Jared Kushner, is lined up to head the new White House Office of American Innovation. Kushner is an NYU JD/MBA grad and is, like President Trump, something of royalty in New York’s real estate scene. As a relatively recent grad, I’m quietly optimistic that Kushner may bring common management consulting and process improvement ideas to the White House (BPR, continuous improvement/Kaizen, Six Sigma, change management) and the executive agencies.
None of those ideas/methodologies is new or innovative particularly, but we could see some seriously interesting case-studies coming out. As it happens, the General Services Administration provides some guidance for the procurement of Management Consulting services (https://www.gsa.gov/portal/category/21150)
Interesting article. The author makes the case that the burden of repaying student loan debt has made millennials less willing to take economic risks, a necessary ingredient in any entrepreneurial endeavor.
The analysis flows from the assumption that the fear of indebtedness pushes talented would-be entrepreneurs to pursue less risky, but safer career paths. The author advocates for policies like income based repayment plans and relief for students who have been defrauded by for-profit universities.
This article provides some guidance for a small business owner who is considering firing an employee. Firing an employee is never pleasant, and, for some small business owners, owning their own business could be the first time they have had to fire someone. Thus, these entrepreneur-bosses may not have an insight into the various legal risks that can come with improperly firing an employee. For example, the article points out that there are various anti-discrimination laws that could be violated during a firing. Additionally, the article notes that proper documentation can help the company in case of a post-firing challenge.
All in all, this article can help small business owners be ready for a firing, when the time comes. It can also help us be mindful of the wide variety of advice that an entrepreneur may need when seeking our legal counsel.